CREA and Sector Defendants in Class-Action Lawsuit: Charges of Anti-Competitive Conduct Mirror ‘Sunderland’ Case

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The Canadian Real Estate Association (CREA) recently notified its industry board and association leadership about a new class-action lawsuit, McFall v. CREA et al., initiated on January 18. This lawsuit marks a significant development within the Canadian real estate sector, encompassing a broad range of defendants, including CREA itself, numerous real estate boards and associations across the country, specific brokerages, and franchisors.

Dubbed a “Canada-wide version of the Sunderland claim,” the McFall lawsuit is spearheaded by the same legal team behind the ongoing Sunderland v. CREA et al. case. However, unlike its predecessor, which named only CREA and the Toronto Regional Real Estate Board (TRREB) as defendants, the McFall action extends its scope to include a myriad of boards and associations throughout Canada, notably excluding TRREB.

The legal action centers on behalf of individuals who have sold properties via the MLS systems operated by the named defendant boards and associations since March 11, 2010. The core of the allegations asserts that the existing rules, which mandate home sellers to offer a cooperating commission to prospective buyer brokerages upon listing a property on an MLS system, foster anti-competitive behaviour. The plaintiffs argue that these regulations, coupled with the concerted efforts by corporate defendants to enforce them, effectively orchestrate a price-fixing conspiracy that shields buyer brokerage commissions from competitive pressures, in direct violation of the Competition Act.

Responding to these allegations, CREA maintains that the MLS systems, underscored by the principle of cooperation among members, facilitate efficient and competitive marketplaces that serve the interests of both Canadian home sellers and buyers. Pierre Leduc, a spokesperson for CREA, underscored the organization’s stance, emphasizing the foundational role of MLS systems and member cooperation in creating marketplaces that are conducive to competition and consumer benefit. Despite the lawsuit’s claims, CREA has expressed its intention to vigorously defend its practices, asserting the meritless nature of the allegations.

Listed among the defendants are various regional real estate boards and associations spanning from Newfoundland and Labrador to the Yukon, alongside numerous brokerage firms such as CIR Realty, eXp Realty, and Royal Pacific Realty Corp., and franchisors including Century 21 Canada and Keller Williams Realty Canada. This wide-ranging lawsuit implicates a significant portion of Canada’s real estate industry infrastructure, signalling a landmark legal battle over the practices and policies governing the nation’s real estate transactions.

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